Euro sway as a trader awaits EU policy response to Ukraine’s war

London — The euro has been waiting for the European Central Bank meeting and the European Union summit to shed light on Block’s policy response to Russia’s invasion of Ukraine, after the euro’s sharpest daily surge since 2016. It rose overnight on Thursday.

Wednesday’s common currency boosts stock markets and bond yields as the Kremlin is optimistic about diplomatic efforts to resolve what the Kremlin calls a “special operation” to disarm Ukraine , Benefited from the risk-on-shift of feelings of falling oil prices.

The euro has been widely regarded as Europe’s largest indicator of the security crisis since 1945, and investors expect it to have a significant impact on Europe’s growth, hitting a 22-month low at $ 1.0804 at the beginning of the week. Has been reached.

At 0849 GMT, the euro was trading at $ 1.10489, down 0.32% after a 1.6% surge on Wednesday, the highest day since June 2016.

Traders turned to the ECB meeting later that day for clues as to how policymakers would balance the risk of high inflation with the damage the war in Ukraine would bring to economic growth. rice field.

“We believe that monetary policy normalization is likely to be delayed, but it will not derail,” UniCredit analysts said.

Investors now expect the central bank to phase out the pandemic bond purchase scheme and raise key interest rates by a total of about 33 bases by the end of the year.

The ECB lags behind other major central banks such as the Federal Reserve Board and the Bank of England in the post-pandemic tightening cycle that is squeezing the euro.

However, recent reports that EU leaders are considering issuing joint bonds to cover energy and defense spending have pushed the currency up. The Brock Summit begins late today in Versailles, western Paris.

The dollar index rose 0.2% after falling 1.17% on Wednesday, and traders were waiting for US inflation, also scheduled for later that day, to further guide Fed expectations next week. ..

The Federal Reserve is widely expected to raise benchmark overnight rates by a quarter percentage point, but there are growing calls for a larger 0.5 percentage point increase before the war.

Economists surveyed by Reuters predict that the US consumer price index will rise 7.9% year-on-year in February from 7.5% in January, but the data is in dispute.

Elsewhere, after rising 0.65% overnight with the euro, Sterling fell 0.2% to $ 1.3159, while the safe yen was 115.88 per dollar, close to the lowest in a month and stocks. It was hit by rising sentiment for high-risk assets such as. ..

Asian stocks rebounded on Thursday, reflecting an overnight rise on Wall Street where falling oil prices pushed stocks up.

Julian Pontus and Arun John